Introducing Sumer.Money: Cross-chain Synthetic Assets Protocol
Reimagining DeFI Lego — The foundation for simpler, more secure, and capital-efficient DeFI
The growth story of Decentralized Finance (DeFi) and the multi-chain ecosystem has been staggering.
We, at Sumer.Money, see the evolution of blockchain platforms to be analogous to the internet of the mid-1990s — both in terms of the infrastructure and the ability to spur new business models. The blockchain ecosystem will scale similar to how the internet scaled horizontally through the TCP/IP protocols and enabled disparate enterprise network communications to be interconnected and reach broader audiences.
We believe that, though the introduction of new blockchain networks and decentralized applications are a critical part of the broader adoption of DeFi and WEB3, they have collectively crippled the DeFi composability due to inefficiencies introduced in the primitive at the core of WEB3 adoption — assets/ tokens
For crypto-assets and smart contract communications to travel seamlessly and interact, collaborate, share, and make transactions with multiple entities across numerous blockchains in the multichain ecosystem, there has to be a common abstraction for data communications like the TCP/IP protocol.
For the financial Internet, we were still missing such a protocol stack. Until now!
Introducing Sumer.Money
Imagine a credit card for DeFi.
- Assets travel wherever you go!
When you travel across a blockchain, your assets travel with you just like your funds travel with your credit card — they are liquid, they are spendable, and are easy to convert back to your native chain.
- Assets travel wherever you want — for you!
When you purchase a product (NFT) or a service (lending and borrowing) on a non-native blockchain, your assets travel for you to complete the experience just like you make an international purchase with your credit card — the DAPPs seamlessly support the cross-chain experience.
Sumer.Money introduces a credit card-like experience with its new multi-chain composable synthetic asset class, unlocking the latent potential in DeFi.
A Cross-chain Synthetic Assets Protocol:
Sumer is a multichain synthetic assets protocol with a lending and borrowing market, deployed simultaneously on a network of supported chains, that provides a credit card-like experience to promote multichain liquidity and cross-chain smart contract communications.
As a DeFi user, you can deposit your assets (ETH, BTC, USDC, USDT etc.) on the native blockchain in the lending and borrowing market to mint synthetic assets (SuUSD, SuETH, SuBTC) that are fungible across the network of all supported blockchains.
- The synthetic assets enable easy, non-custodial cross-chain transfer while representing the same security characteristics and collateral backing.
- The synthetic assets can be traded, farmed, or spent across multiple chains.
- The protocol design enables the availability of instant liquidity for the synthetic assets on all supported networks in the lending and borrowing market.
The transfer of these Sumer synthetic assets in the multi-chain environment represents the immutable passage of settlement information through smart contract communication — No more custodial bridge deposits!
Key-Value Propositions:
The cross-chain smart contract communication provides the multi-chain assets with the ability to move liquidity cross-chain and the ability to abstract chain specific information from end-users leading to;
- Breaking cross-chain Liquidity and smart contract communication barriers
- Enabling Cross-chain Liquidity Routing and Abstraction for dApps
- Non-custodial, highly decentralized, and secure Cross-Chain Movement of Assets
Synergy with current cross-chain solutions:
With the introduction of a new multichain asset class, Sumer’s focus has been addressing the underlying issue in the key primitive: crypto assets.
At its core, Cross-chain solutions address the ‘process’ of transfer while Sumer addresses the ‘product’ to be transferred. This places Sumer in a unique position to enable a synergistic relationship with current cross-chain solutions.
Protocol Design
The Sumer Protocol is essentially a Cross-chain Synthetic Asset Protocol with a lending and borrowing market.
Cross-chain Fungible Synthetic Asset Protocol with a lending and borrowing market:
The Sumer protocol will encompass SuTokens (SuUSD, SuETH, SuBTC, etc.) — the first of its kind cross-chain composable synthetic assets. The SuTokens cross-chain transfer is a result of information passing through cross-chain smart contract communication (essentially burning on the source chain and minting on the destination chain).
This simple but powerful implementation significantly simplifies the security model of cross-chain bridges. It eliminates the requirement of a custodial wallet managed by the bridge operators.
The SuTokens can be minted interest-free and backed by collateral deposited in the protocols’ Lending and Borrowing Market. Users can utilize SuTokens across any supported blockchain, while their deposits earn yields in the lending and borrowing market.
The SuTokens present a unique value proposition that they can be easily deposited as collateral into the Sumer Protocol money market on any supported network to borrow native assets providing immediate utility. SuTokens are always valued at the price of the underlying USD, ETH, or BTC within the protocol.
While the protocol can accept any type of cryptocurrency as collateral, the initial deployment of the Sumer Protocol will mainly accept on-chain stablecoins and blue-chip assets (ETH, BTC, USDC, USDT, etc.) as collateral to smoothen out volatility in the collateral to reduce the risk exposure of the protocol.
Sumer Money Market
Sumer Protocols money market is Compound-inspired lending and borrowing protocol that enables:
- Deposit of Native Assets (USDC, USDT, WBTC, ETH)
- Minting of SuTokens (SuUSD, SuETH, SuBTC, etc.) against the deposited native assets (USDC, USDT, ETH, WBTC)
- Borrowing native assets (USDC, USDT, ETH, WBTC) against deposited native assets (USDC, USDT, ETH, WBTC)
- Borrowing native assets (USDC, USDT, ETH, WBTC) against deposited SuTokens (SuUSD, SuETH, SuBTC etc.)
- Repayment of borrowed assets
The deposited native assets source their deposit yields from users/ DAOs/ dApps borrowing the assets.
Depositing Native Assets
DeFi users looking to leverage the new multi-chain fungible asset class can deposit the whitelisted assets to the protocol across all supported networks to receive corresponding cToken (e.g., cETH, cUSDC), which entitles them to redeem the supplied assets in the future.
Minting Sumer Assets
Using their supplied assets as collateral, users can mint SuTokens (Initially SuUSD, SuETH, SuBTC.) from Sumer’s mint function to be traded, farmed, or spent across multiple chains.
Sumer introduces a concept of asset groups — homogeneous and heterogeneous. Each asset group consists of tokens with similar value, liquidity, and risk factor. For example USDC, USDT, and suUSD are homogeneous assets and belong to the same asset group whereas USDC and ETH represent heterogeneous asset groups.
The protocol has the option to charge users’ interest on the minting of SuTokens. However, the minting interest is set as 0% at the launch of the protocol. Any changes to the mint interest will be made through the governance process.
Borrowing Native Assets
Using the supplied assets or SuToken as collateral, users can borrow native assets (USDC, USDT, ETH, WBTC) from Sumer’s borrowing facility.
Repayment of SuTokens
Users can repay the minted SuTokens to the Sumer Protocol up to the minted balance. At launch, there will be no interest charged on minted SuTokens.
The protocol also has the option to charge users an exit fee while repaying the minted SuTokens. However, the exit fee is set as 0% at the launch of the protocol. Any changes to the exit fee will be made through the governance process.
Repayment of Borrowed Native Assets
Borrowers can repay assets to the Sumer Protocol up to the borrowed balance.
Interest Rate Model
Sumer Protocol has adapted a variable interest rate model, popular with other DeFi Money Market protocols in the market (such as Compound and Aave), where the rates are largely determined by the supply and demand of assets, represented by its Utilization rate.
Furthermore, the computation of interest rates is separated into two stages, the Standard model and the Jump (Kink) model, to further incentivize/disincentivize the depositing and borrowing activity.
Sumer Governance
The governance of the protocol and the Sumer ecosystem — including future iterations of the protocol will be driven through the governance token SUMER.
Sumer will be a beta product launch in Q4 2023 with a Token Generation Event (TGE) planned at a later date.
The protocol will initially be governed by the founding team, and will eventually transition to a Decentralized Autonomous Organization (DAO). As part of the DAO, holders of the SUMER token will be able to initiate proposals and vote on issues that will steer the direction of the protocol.
Strategic Funding
Sumer.Money has raised a total of $2 million through its seed and strategic investors to date. The strategic round was led by Pantera and A&T Capital with participation from Sanctor, Blockwall, ROK, Waterdrip, Kernel, AngelDAO, NoviDAO, and founders/executives in the DeFi space.
What’s Next
Q4 2023
Beta Product deployment on Arbitrum, Meter Network and Base.
Completion of Certik Audit of the Protocol
It is clear that cross-chain interoperability is the present and the future of blockchain, and Sumer intends to address the key primitive of multichain native assets to plug the missing piece in the DeFi lego. Sumer intends to play a key role in unifying the entire blockchain ecosystem, making the space easier to navigate while also opening up new opportunities and use cases.
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